The IDB has approved a $500m loan for Mexico to support its mortgage industry. This is the second installment of a $2.5bn 10-year credit line, the bank says. The loan will enable Sociedad Hipotecaria Federal (SHF) to continue offering lines of credit to Sofoles and Sofomes, and maintain liquidity in secondary markets through the acquisition of bonds backed by mortgages. The loan is for a 25-year term, with a 5-year grace period, at an adjustable interest rate over Libor.
Category: Structured Finance
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CentAm Banks Ready Securitizations
Two Central American banks are eyeing securitizations of future flows and financial receivables. Guatemala’s Banco Industrial, which already has two outstanding DPR issues, is currently studying a third, says Diego Pulido, a director at the bank. Banco Industrial has not yet picked a bank for its follow-up issue, which would involve securitizing remittances and export credits. The bank’s 2 existing DPR transactions include a $200m 2012 notes issue and a $300m 2014 bond, he says. In Panama, Banco General is heard to be mulling over a short list of banks to help it issue its debut DPR bond, say people familiar with the process.
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LatAm Remittances Drop 11%
The IDB forecasts that LatAm and the Caribbean will see remittances drop by 11% in 2009 to about $62bn. Remittances from the US – where unemployment among Latin Americans is higher than among the general population – are also expected to decline by 11% to about $42.3bn this year. Remittances from Europe, another major destination for Latin American migrants, are expected to drop by 14% to about $9bn. Remittances from other parts of the world will slide about 4.5% to $10.4bn.
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Cemex Equity Draws Fevered Pitches
With a $15bn bank debt restructuring practically in the bag, Cemex management is heard turning its focus to an intensifying stream of pitches coming from ECM teams across the Street for its expected equity offering. Bankers close to the company agree on several points: 1) the equity market today would be receptive to a Cemex offering; 2) conditions permitting, Cemex should use positive momentum from the successful closing of its restructuring to launch a deal, which implies pricing as early as September; 3) the company is considering hybrid structures that could help it avoid dilution at current lower trading levels, though one banker argues the case for a plain vanilla trade is also strong, given the company’s already complicated financing scheme, and 4) the size of an issue would depend on a number of factors, including the company’s ability to continue selling assets, though a reasonable expectation might be of an offering equal to roughly 10% of the company’s market cap, which stood at $9.5bn on Friday. One syndications banker says the company and its creditors are in full agreement that the most effective way to reduce leverage is through an equity offering, though the company will not be forced to tap if market conditions aren’t supportive. Cemex is, however, being incentivized in its restructuring agreement to prepay its bank debt, and asset sales may not cover much of what it needs for that. Reducing leverage right away would also put the company in a better position to consider a bond offering in 2010, possibly even with an improved credit rating. Cemex is today rated B/B2/B minus. Bond proceeds would be used to pay down more bank debt and extend its maturity profile. “The market is expecting this [equity offering,]” says one Cemex equity analyst, who remarks that despite the overhang, large orders for the stock have come across his shop’s desk in recent days. Cemex ADRs have risen 40% since July 10, and closed Friday at $10.93, up 3.0%.
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Bancomer Reopens Private Sector RMBS
BBVA Bancomer has sold MXP5.9bn in 2029 RMBS in Mexico’s domestic market, becoming the first non-government institution place such a transaction this year. The deal consists of three senior tranches which amortize one after the other. The bank priced a MXP562m piece at 6.14%, a MXP1.73bn tranche at 8.04% and a MXP3.62bn piece at 10.48%. The bonds are backed by 15,100 Bancomer mortgage loans. BBVA managed the transaction, rated AAA on a national scale. The transaction from a MXP20bn shelf is the fourth this year in the Mexican market, after two from Infonavit, which opened the market in May, and one from fellow government-backed lender Fovissste. Both plan additional transactions set for late August or early September, including a MXP4bn deal from Fovissste.
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Brazil State Gets $50m Road Loan
The IDB has extended a public, guaranteed $50m loan to the state of Santa Catarina to improve its state highways. The facility has a 25-year life and 3-year grace period, paying a Libor-based spread. In the first half of 2009, the spread over Libor for the project was equal to 30bp, implying an annualized rate of 60bp over Libor, though that spread is expected to be reset to a new level for the second half, say people familiar with the transaction. The financing covers 70% of the project costs. The funds are being used to repair, upgrade and increase safety of around 50km of roads linking the cities of Lindoia and Irani, and Sao Domingos and Bom Jesus.
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Fovissste Schedules RMBS Sequel
Mexico’s Fovissste will sell MXP4bn in RMBS in a follow up to its debut June transaction, according to regulatory documents. As with its previous MXP3.5bn issue, the sale will consist of a single 2039 UDI-denominated tranche, paying a fixed interest rate. The points to a sale date of August 18, though bankers on the sale note the bond could come later than that, depending on market conditions and the regulatory process. The mortgage lender’s previous bond priced at a fixed 5.31%, or UDIbonos plus 225bp. Fovissste has a MXP20bn shelf, from which it should issue several times over the next 12-18 months. Banorte, Ixe, BofA-Merrill and Goldman Sachs, the same group as the previous bond, are managing the upcoming sale. Fovissste and fellow lender Infonavit have relied on this type of simple structure and government-supported status this year to place bonds in an otherwise closed Mexican RMBS market. Infonavit is expected in late August or September to bring a follow-up to its July MXP2.59bn 2031 RMBS deal managed by Banamex and Deutsche, according to bankers.
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Mexico Gets IDB Financing for Education
The IDB has approved a $100m loan to Mexico for the second phase of a program to improve technical education at the secondary and post-secondary levels. The IDB approved $50m for the first phase in September 2004. The IDB loan is for a 25-year term, with a grace period of 5 years and a Libor-based variable interest rate.
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Ceara Gets IDB Money to Fix Roads
Brazil’s state of Ceara is getting a $159m loan from the IDB to improve more than 1,000 kms of roads. The USD denominated loan will mature in 25 years and has a 5-year grace period. The interest rate will be based on Libor. The IDB says it will finance 62% of the total cost of the project while Ceara will finance the remainder.
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Mexican Lenders Eye Local Bond Return
Mexican mortgage lender Fovissste is preparing to follow-up a debut June MXP3.5bn RMBS issue with a similarly sized transaction from the same program, according to bankers familiar with the deal. A date has yet to be set, but the sale is expected in the first half of August. Tenor will likely be similar to the 2039 June issue, which featured a 3.8-year average life and 7-year expected maturity. The UDI-denominated bond priced at a fixed 5.31%, or UDIbonos plus 225bp. Fovissste has a MXP20bn shelf, from which it should issue several times over the next 12-18 months. Banorte, Ixe and BofA-Merrill and Goldman Sachs, the same group as the previous bond, are managing the sale. Fellow government-backed lender Infonavit is also expected to bring a follow-up to its July MXP2.59bn 2031 RMBS deal managed by Banamex and Deutsche. Both the Infonavit and Fovissste deals found acceptance from investors in a skeptical market due to their simple 1-tranche structures and government-supported status.